WH Smith reaffirms commitment to US travel retail

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UK airport and news retailer WH Smith announced its annual results today, with a recent sales update showing that its US travel-retail division was on the road to recovery while UK growth has slowed

Group annual profits before exceptional items fell 8% to £122m ($189m) pulled down by £16m ($25m) losses at the US hotels and airports business. Annual sales in the US were down 12% to £216m ($335m). On a like-for-like stores basis sales declined 13% and the result was a rapid move from profit to loss, said the company. Total group sales were up 7% to £2.9bn ($4.5bn).

However the US market is seen as improving. In the 6 weeks to 12 October 2002, US like-for-like sales were up 13% with hotels up 8% and airports up 15%. On a two-year view, the US business was down 15% on a comparable basis.

WH Smith said in a statement, "The UK retail, publishing, news distribution and Asia/Pacific retail businesses have all performed well during the year."

"The US travel business incurred material losses as a result of the deterioration in market conditions following September 11, and the slowdown in the US economy. A return to profitability is dependent on recovery in passenger volumes in airports and occupancy levels in hotels. Although this recovery will occur the pace remains uncertain."

Asia/Pacific retail had a particularly strong result in New Zealand. Sales in the division, which includes airports and the Angus & Robertson bookstores in Australia, were up 7% to £138m ($214m).  In the past four years WHSmith has expanded its airport and downtown stores in New Zealand and also has stores at Hong Kong and Singapore Changi airports. This division posted annual profits of £5m ($8m).

Commenting on the results group ceo Richard Handover said: "The US travel business has had a very difficult year due to severe market conditions. Nevertheless management action has been taken to reduce the extent of the losses."

"The continued focus on operational improvements that are being made across the group and the prospects of recovery in the US, mean we remain optimistic about our future trading prospects."